In fiscal year 2018-19, Austin city staffers predict that for the first time more Austin ISD property tax revenue will go to the state than to the school district because of Texas’ “Robin Hood” school finance system.

This fiscal year, 2017-18, the school district will send an estimated $534 million—or 45 percent—of its property tax revenue to the state. AISD Chief Financial Officer Nicole Conley said this has debilitating effects on the operation of the school district, expected to run on a revenue deficit of between $40 million and $50 million in FY 2017-18. Conley said this leaves several AISD programs vulnerable to cuts and makes it tough to pay competitive wages.

The system allows the state to tax so-called property-wealthy districts and recapture a percentage of their property tax revenue to help fund the operation of the state’s poorer districts.

“To be clear, [school] property taxes are no longer a local property tax. … Let’s call it what it really is … a state property tax,” Austin Mayor Steve Adler said. “And the recent increases by the state of property taxes has been extreme, geometric and irresponsible.”

After it was clear the Legislature’s special session would finish with no changes to school finance, Adler introduced a funding strategy called a tax swap that aimed to help AISD circumvent some of its dues to the state.

Under the tax swap the city would have increased its FY 2017-18 tax rate 1.6 cents above the rollback rate. The rollback rate is the highest increase a local government can effect in Texas without a potential tax rate election.

The tax hike would have hauled in an extra $10 million the city would use to pay for contracted services with AISD. In return, AISD would agree to a sharper drop in its tax rate—by 1.9 cents—in FY 2018-19, resulting in a two-year tax savings for AISD taxpayers.

The effect on the city’s senior population, who receive a school district tax rate freeze, and Austin taxpayers who do not live within the boundaries of AISD was not balanced, so Adler said he agreed to go back to the drawing board with the hope of presenting a more feasible proposal next year.

Although she said the school district has been discussing the idea of a tax swap for a few years, Conley acknowledged the timing was off, and the proposal was not fully matured.

However, the impacts of the district’s financial woes will not wait until the proposal is ready, and Conley said AISD will still look to the city for help, specifically through a continuation of funding for two AISD programs—parent-teacher support specialists and the family resource center.

Although the city vowed to continue its aid to the school district through FY 2018-19, Adler said he would rather the state take responsibility.

“This council felt that there were opportunities with the school district to help fund [programs],” Adler said. “It would be nice if the state funded these kinds of things as I believe it’s constitutionally obliged to do.”